Triple lock: Calls for ‘lasting plan’ as state pension increases soon to be ‘unaffordable’ | Personal Finance | Finance

The Government need to take action on the triple lock as state pension increases will soon be unaffordable, an expert has warned.

In the Autumn Statement, Chancellor Jeremy Hunt confirmed the policy would be retained for next year’s increase, providing an 8.5 percent payment increase next April.

Mark Pemberthy, benefits consulting leader at Buck, told Express.co.uk: “The Government’s pledge to keep the triple lock in place until 2024 will have been welcomed by pensioners across the country.

“Pensioner poverty reached close to 18 percent earlier this year, and the decision is crucial to help millions of pensioners manage the rising cost of living.

“However, in the long-term maintaining the triple lock does not look affordable. The cost of the state pension as a percentage of GDP is projected to increase by more than 50 percent over the next 50 years.”

He said the triple lock has raised the value of the state pension back up to around 30 percent of average earnings, which is a similar proportion as it was when the earnings link was first broken in 1980.

Mr Pemberthy said a key consideration when deciding what to do with the triple lock is the state pension age. This is set to increase from the current 66 to 67 and then to 68 over the coming years.

He said: “The 2023 review of state pension age observed that life expectancy is no longer increasing as fast as expected, which could question the need or timing of future increases in state pension age if the current balance between working life and retirement is to be maintained.

“These issues go way beyond the usual five-year political horizon of any Government, so irrespective of how the next election plays out we would welcome a consensus strategy on the benefits people receive after they stop work and how that is for.

“In the long-term, maintaining the triple lock does not look affordable, so there is a real need for a lasting plan for a sustainable state pension to enable us all to plan for our futures with confidence, whilst ensuring fairness for future generations.”

With the 8.5 percent increase next April, the full basic state pension will increase from £156.20 a year to £169.50 a year while the full new state pension will go up from £203.85 a week to £221.20 a week.

Retirement specialist Gary Smith, from Evelyn Partners, also spoke to Express.co.uk about the future of the triple lock, predicting future increases may not be as much as in recent years.

He said: “There’s no doubt the 10.1 percent increase in this financial year and the 8.5 percent increase due in April have focused attention on the triple lock – even though its defenders would say that is exactly why it exists, to protect pensioners against high inflation and to maintain their minimum living standard in line with wider society.

“It seems unlikely that increases of the same magnitude will follow in subsequent years but as noted, even without that, the expense of the state pension is huge and escalating so if the triple lock were to stay then something would have to give and that would probably be the state pension age.”

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